SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
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Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER 0-25413
RENEWABLE ASSETS, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 20-0858618
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
7040 W. Palmetto Park Road, No. 572, Boca Raton, FL 33433
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(Address of Principal Executive Offices)
(561) 488-9938
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(Issuer's Telephone Number, Including Area Code)
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(Former Name and Former Address of Issuer Since Last Report)
Check whether the issuer (1), has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of September 9, 2005, the
Registrant had 3,014,350 shares of Common Stock outstanding.
Transmittal Small Business Disclosure Format (check one)
Yes [ ] No [X]
RENEWABLE ASSETS, INC.
FORM 10-QSB
For the Quarter Ended June 30, 2005
INDEX
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Page
Number
PART I FINANCIAL INFORMATION
Item 1 - Consolidated Balance Sheet
at June 30, 2005 1
Consolidated Statements of Operations
for the three months and six months
ended June 30, 2005 and June 30, 2004 2
Consolidated Statements of Cash Flows
for the six months ended
June 30, 2005 and June 30, 2004 3
Notes to Consolidated Financial Statements 4
Item 2 - Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7
Item 3 - Controls and Procedures 9
PART II
Item 1 - Legal Proceedings 10
Item 2 - Changes in Securities 10
Item 3 - Defaults Upon Senior Securities 10
Item 4 - Submission of Matters to a Vote
of Security Holders 10
Item 5 - Other Information 10
Item 6 - Exhibits and Reports on Form 8-K 10
Signature 11
Exhibit 31.1 12
Exhibit 32.1 13
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2005
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Balance Sheet 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4-6
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2005
ASSETS
CURRENT ASSETS:
Cash $ 10,130
Commissions Receivable 4,000
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TOTAL CURRENT ASSETS $ 14,130
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LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 264
Income Taxes Payable 315
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TOTAL CURRENT LIABILITIES 579
DUE TO PARENT 5,700
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TOTAL LIABILITIES 6,279
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SHAREHOLDER'S EQUITY:
Preferred Stock, $.001 Par Value -
1,000,000 Shares Authorized -
-0- Shares Issued and Outstanding --
Common Stock, $.001 Par Value -
29,000,000 Shares Authorized -
3,014,350 Shares Issued and Outstanding 3,014
Retained Earnings - Development Stage 4,837
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TOTAL SHAREHOLDER'S EQUITY 7,851
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TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 14,130
==========
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED CUMULATIVE
JUNE 30 JUNE 30 DEVELOPMENT
---------------------------- --------------------------- STAGE
2005 2004 2005 2004 AMOUNTS
------------ ------------ ------------ ------------ ------------
COMMISSION REVENUES $ 11,470 $ 3,760 $ 4,000 $ 2,160 $ 65,525
GENERAL AND ADMINISTRATIVE
EXPENSES 9,016 1,905 1,898 1,505 156,447
------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES 2,454 1,855 2,102 655 (90,922)
PROVISION FOR INCOME TAXES 315 278 -- 98 791
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 2,139 $ 1,577 $ 2,102 $ 557 $ (91,713)
============ ============ ============ ============ ============
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE $ (.001) $ -- $ -- $ -- $ (.030)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 3,014,350 3,014,350 3,014,350 3,014,350 3,014,350
============ ============ ============ ============ ============
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
CUMULATIVE
DEVELOPMENT
STAGE
2005 2004 AMOUNTS
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss) $ 2,139 $ 1,577 $ (91,713)
Adjustments to Net Cash Provided
by (Used In) Operating Activities:
Commissions Receivable (2,800) (2,160) (4,000)
Accounts Payable (36) 540 264
Income Taxes Payable (161) 278 315
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (858) 235 (95,134)
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CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of Common Stock -- 3,014 99,564
Proceeds from Borrowings 5,700 -- 33,200
Repayment of Borrowings -- -- (27,500)
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,700 3,014 105,264
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NET INCREASE (DECREASE) IN CASH 4,842 3,249 10,130
CASH - Beginning of Period 5,288 -- --
------------ ------------ ------------
CASH - End of Period $ 10,130 $ 3,249 $ 10,130
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
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The Company made payments for income taxes amounting
to $476. No interest payments were made.
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Nature of Operations:
A.M.S. Marketing, Inc. ("AMS" or the Company) was incorporated in
the state of Delaware on July 23, 1998.
On July 21, 2003, "AMS" acquired 100% ownership of Advanced
Imaging Systems, LLC ("AIS"), a privately owned Delaware entity in
exchange for 1,200,000 shares of its previously unissued common
stock. Prior to the execution of the exchange agreement, the
members (owners) of "AIS" purchased a controlling interest in
"AMS" from an existing "AMS" shareholder. As a result of the
foregoing transactions, the previous owners of "AIS" became the
81.96% owners of "AMS". For accounting purposes, "AIS" is
considered to be the acquirer and "AMS" the acquired entity. The
business combination was accounted for as a reorganization of
entities under common control. No fair value adjustments resulted
from the reorganization.
Prior to the merger, the Company's ("AMS") principal business was
the brokerage of pre-owned name brand copy machines from a
facility located in Pompano Beach, Florida.
In October, 2003, A.M.S. Marketing, Inc. filed a Certificate of
Amendment to change its name to International Imaging Systems,
Inc. ("IIS").
On December 12, 2003, "IIS" formed Renewable Assets, Inc., a
wholly-owned subsidiary, to operate the photocopier division.
On April 13, 2004, the Board of Directors approved a plan to spin
off the Company's photocopy division (Renewable Assets, Inc.)
3,014,350 shares of $.001 par value common stock will be issued to
existing shareholders of International Imaging Systems, Inc. in
connection with the spin-off upon approval of the transaction by
the Securities and Exchange Commission.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Basis of Presentation:
The financial statements include the accounts of the predecessor
Company's photocopier division. The historical accumulated deficit
was eliminated as a result of the reorganization.
Development Stage:
The Company's management is in the process of raising working
capital, developing a new business plan and exploring various
business opportunities. Accordingly, the Company is classified as
a development stage company.
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
items included in the financial statements. Actual results could
differ from those estimates.
Financial Instruments:
The carrying values of commissions receivable and accounts payable
approximate fair value at June 30, 2005.
Commissions Receivable:
All accounts are considered to be fully collectible as of June 30,
2005.
Commission Revenues:
The Company recognizes commission revenues as an agent for a
principal. As such, commissions are recorded at a fixed rate after
the machines are accepted by the ultimate purchaser. The Company
locates buyers but is not obligated to take possession of, or ship
the machines. Selling prices of the machines are determined by the
principal, and not the Company. Collection of the sales price and
customer returns are the responsibility of the principal.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Advertising:
Advertising costs are expensed as incurred.
Earnings or (Loss) Per Common Share:
Basic and diluted earnings per common share is calculated by
dividing net income or loss by the weighted average number of
common shares outstanding during the period. Shares issued are
considered to be outstanding for all periods presented.
NOTE B - CONCENTRATION OF RISK -
Substantially all of the division's revenues are derived from the
sale of pre-owned, refurbished photocopy machines through a marketing
arrangement with one company. Termination of the marketing
arrangement would have a material adverse effect upon the business.
NOTE C - RELATED PARTY TRANSACTIONS -
The Company received a $5,700 working capital advance from the
shareholder (parent company) during 2005.
Commission expense of $940 was paid to the Company's president during
2004.
NOTE D - GOING CONCERN UNCERTAINTY -
The photocopier division has sustained recurring operating losses in
prior years and has minimal assets. These factors raise substantial
doubt as to the business's ability to continue as a going concern.
Management's plans regarding this uncertainty are to raise additional
working capital through the implementation of a successful business
plan and the sale of common stock to the public.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Overview
The Company is in the development stage. We commenced operations in
2003. We were formed to pursue the pre-owned, brand name photocopier marketing
services business of our parent, International Imaging Systems, Inc., that
commenced operations in the Fall of 1998.
The Company is currently engaged in marketing activities for an
unrelated third party and has no employees other than its president, Alfred M.
Schiffrin, who is unsalaried. Pursuant to an oral agreement among the Company,
International Imaging Systems and Mr. Schiffrin, he is entitled to 25% of the
profits on our sales revenues until the consummation of the spin-off of our
shares owned by International Imaging Systems to its shareholders on the basis
of one-half share of our common stock for each share of International Imaging
Systems' common stock owned by the holders thereof on April 14, 2004. To date,
we have been unable to comply with applicable rules and regulations relating to
the spin off and there can be no assurance that the spin off will be effected.
Mr. Schiffrin, the Company and International Imaging Systems have agreed that
Mr. Schiffrin will accept and receive shares of International Imaging Systems'
common stock in lieu of any commissions accrued or that may accrue through June
30, 2006.
We do not anticipate hiring any employees, purchasing any plant or
significant equipment or conducting any product research and development during
the next twelve months. We also do not anticipate initiating any sales
activities for our own account until such time as our resources permit.
During the next twelve months, we intend to continue marketing
pre-owned, brand name photocopiers. We will also continue to explore the
marketing of other products, including new and pre-owned items of office
equipment other than photocopiers, office furniture, home furnishings and
appliances, as well as the purchase and resale of such items to the extent that
our limited resources permit. We are also considering other means of expanding
our business, such as through acquisition, merger or other form of business
combination involving one or more entities engaged in the same or similar
business as us. Any such transaction may entail the issuance of additional
shares of our common stock. Although management has had preliminary discussions
from time to time with potential candidates, there are no current plans to
engage in any such transaction. In any event, any acquisition, merger or
combination will be made in compliance with applicable Federal and state
securities and corporate law, and, depending on the structure of the
transaction, submission of information to shareholders regarding any such
transaction prior to consummation, as well as shareholder approval thereof, may
not be required.
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We earn commission revenues as a sales and marketing agent for an
unrelated third party principal. We locate buyers and are not obligated to pay
for, take possession of or fulfill the shipment of the photocopiers sold. In
addition, collection of the sales price and customer returns are the
responsibility of the unrelated third party principal. Accordingly, there are no
direct costs that are attributable to sales and therefore gross profit as a
percentage of sales is and will remain a constant at 100% until such time, if
ever, that we operate in the capacity of a principal.
As discussed below, the three month period ended June 30, 2005 was
characterized by revenues of $4,000, offset by general and administrative
expenses of $1,898, resulting in a net profit of $2,102 in such period as
compared to revenues of $2,160, general and administrative expenses of $1,505,
and a net profit of $655 in the same period in the prior year.
Results of Operations
Sales
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Sales for the three month period ended June 30, 2005 were $4,000 as
compared to sales of $2,160 for the same period in the prior year, an increase
of 85%. Sales for the six months period ended June 30, 2005 were $11,470 as
compared to sales of $3,760 for the same period in the prior year, an increase
of 205%. The increase in sales for both periods is not considered meaningful.
The Company does not believe that fluctuations between reporting periods is
necessarily indicative of any trend but is more related to factors beyond the
Company's control. Accordingly, comparisons between periods may not be
meaningful.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses ("G&A") were $1,898, or 47% of
sales for the three months ended June 30, 2005 as compared to $1,505, or 70% of
sales for the same period in the prior fiscal year. G & A were $9,016, or 79% of
sales for the six months ended June 30, 2005 as compared to $1,905, or 51% of
sales for the same period in the prior year. The increase in G & A as a
percentage of sales in the six month period ended June 30, 2005 is primarily
attributable to the allocation of certain legal and accounting expenses by our
parent, International Imaging Systems.
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Liquidity and Capital Resources
- -------------------------------
The Company financed its operations during the three month period ended
June 30, 2005, through revenues from operations. As of June 30, 2005, the
Company's principal sources of liquidity consisted of cash of $10,130 and
commissions receivable $4,000. Because we have limited operating expenses, we
believe that such funds, together with expected revenues from operations, will
be adequate to fund operations for the foreseeable future. However, we intend to
seek to raise additional capital from both our parent's shareholders and new
shareholders in order to maintain and expand our operations. There can be no
assurance that we will be able to find sources of financing on terms acceptable
to us, if at all. If we do not find sources to finance such activities, we will
be unable to expand our operations, and if any of the expected sources of
revenue should fail to appear or our expenses should increase, we may have to
curtail certain of our current activities.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls. We conducted an evaluation, with the participation of
the Chief Executive and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Our disclosure controls and procedures are designed to ensure that
information required to be disclosed by Renewable Assets, Inc. in the reports we
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is recorded, processed, summarized and reported on a timely basis. Based
upon that evaluation, the Chief Executive and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of the end of the
period covered by this report so as to alert him in a timely fashion to material
information required to be disclosed in reports we file under the Exchange Act.
(b) Changes in Internal Control Over Financial Reporting.
None.
FORWARD LOOKING STATEMENTS
This Form 10-QSB and other reports filed by the Company from time to time with
the Securities and Exchange Commission (collectively the "Filings") contain or
may contain forward looking statements and information that are based upon
beliefs of and information currently available to the Company's management as
well as estimates and assumptions made by the Company's management.
When used in the Filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of the Chief Executive Officer and the Chief
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer and the Chief
Financial Officer pursuant to 18 U.S.C. Section 1350.
(b) Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned duly authorized.
RENEWABLE ASSETS, INC.
By: /s/ ALFRED M. SCHIFFRIN
-------------------------------------------
Alfred M. Schiffrin
Chief Executive and Chief Financial Officer
Dated: September 14, 2005
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